With US President Joe Biden’s upcoming Africa trip shining a spotlight on Angola, the country is taking advantage of this week’s IMF and World Bank meetings in Washington to pitch itself as ripe for private investment. As one of the most indebted countries on the continent, Angola is on a multi-year mission to transition to a market-friendly economy as it looks to reduce its dependence on commodities exports – oil, gas and diamonds.

As the US and EU invest hundreds of millions of dollars in the development of the Lobito corridor linking the rich mines of central Africa to Angola’s Atlantic coast, Luanda sees an opportunity to jumpstart its economic diversification strategy.

In exclusive interviews with The Africa Report, Planning Minister Victor Hugo Guilherme and Governor Manuel António Tiago Dias of Banco Nacional de Angola, the central bank, outlined how the massive investment could help transform the country’s economy and its public finances.

“What we see is that there is a lot of enthusiasm for the potential that this represents. The visit of the president of the United States will give a lot of visibility to this gigantic project for the region, and especially for Angola,” says Dias.

“This is why the Angolan authorities, the central bank in particular, are working to improve the business climate and to ensure that Angola is a country in which all those who are interested can invest.”

Solid foundation for paying off debt

The remarks come as Angola is looking beyond its historic ties to Russia and China to emerge as a strategic player in the region following the end of 38 years of autocratic rule by former president José Eduardo dos Santos in 2017.

Everything that happens in China from the point of view of economic growth can have effects on the Angolan economy

Under his successor, João Lourenço, the country has hosted peace talks between Rwanda and the Democratic Republic of Congo (DRC) in the eastern Congo and embarked on a programme of liberalisation and privatisation, scoring the right to host next year’s US-Africa Business Summit.

This week, Luanda is sending an uncharacteristically large delegation to the Washington meetings after requesting an IMF visit despite not having a programme with the fund.

“During our discussions, I commended Angola for successfully implementing economic reforms in the areas of fiscal management, revenue mobilisation, financial stability and central bank independence,” IMF Deputy Managing Director Antoinette Sayeh said at the end of her March visit.

“These reforms have helped to reduce Angola’s debt vulnerabilities, improve business climate and enable the resumption of growth.”

Dias says the country’s finances are in better shape as a result:

• $14.9bn in forex reserves as of last month, enough to cover eight months of expected imports
• GDP growth of 4.1% year-on-year in the first quarter of 2024, the largest annual expansion in nine years
• A slowing, if still elevated, annual inflation rate, down to a five-month low of just under 30% in September.

He says the bank is keeping an eye on troubling developments, including the conflict in the Middle East and China’s economic slowdown, reverberating across Africa.

According to the IMF’s World Economic Outlook released on 22 October, GDP across sub-Saharan Africa is expected to grow by only 3.6% in 2024, on par with 2023 and down from an anticipated 3.8% in April.

“In emerging market and developing economies, disruptions to production and shipping of commodities – especially oil – conflicts, civil unrest and extreme weather events have led to downward revisions to the outlook for the Middle East and Central Asia and that for sub-Saharan Africa,” according to the IMF.

“It is something that we are following very closely, given that China is Angola’s main oil export market, so it is a partner that must be taken into account,” says Dias. “And everything that happens in China from the point of view of economic growth can have effects on the Angolan economy.”

Angola owes China more money than any other country in Africa – about $17bn. After a successful renegotiation of Chinese debt repayments earlier this year, the central banker says foreign lenders should take solace in the country’s ability to pay back its creditors.

“We think that this is also a good thing to show that when you invest in Angola, there is the assurance that you can repatriate your capital or when you finance the authorities or local companies, there is no problem with the payment of the debt,” he says.

Still, Dias says there is a need in Angola – and across Africa – to find more funding for human capital and physical infrastructure.

“We are indeed being attentive to the growth of the debt, which is why the authorities are looking more towards private investments,” he says. “We also look at the financing possibilities that exist internally. This is why in Angola, the authorities turn to local banks, but also to companies and individuals who have excess savings to lend to the government.”

‘Working with everyone’

Underpinning the investments is a five-year economic vision for 2022-2027 that prioritises human capital and agriculture, says Guilherme. Biden’s visit and its focus on the Lobito corridor are a key part of that vision, he says.

“It is believed that with this visit, [Biden] can increase the private participation of Americans in Angola,” Guilherme says.

For the Americans and Europeans, he says, the rail line is principally about diversifying the Chinese-dominated supply chain of critical minerals needed for the green energy revolution. But for Angola, it has the potential to be a transformative project with investments in educational, agribusiness and industrial production all along the corridor.

“We look at the Lobito corridor in another way,” he says. “We see a way of taking advantage of this corridor, of the development of the region where this corridor must pass.”

Already, he says, Angola is creating industrial zones in places like Huambo and Bié.

“We see the issue of agricultural production because we have a lot of land that can be used for agriculture, good land in this region,” Guilherme says. “We are talking especially about education, about having technical and professional schools to have people capable of working in this corridor. We are talking about health, we are talking about tourism also.”

While the West may be seeing the project through the lens of its competition with China, Guilherme says Angola doesn’t view it as a zero-sum game but rather will push for collaborative investments when they make sense.

Interested parties cannot do whatever they want, he says. For the past two months, a joint decree requires potential private investors in the corridor to go through the Ministry of Transportation while Guilherme’s Planning Department handles donors and financial institutions.

“To diminish this issue of everyone coming to do what they want, we have a plan,” he says. “And we say that within this framework, everyone can participate.”